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May 23, 2013

Top Portfolio Products: ProShares Offers Hedged High-Yield Bond ETF

New products introduced over the last week include a new high-yield bond ETF from Proshares and a partnership between Smarsh and NASDAQ OMX to offer offer Smarsh archiving and compliance solutions on the SMARTS platform.

In addition, S&P Capital IQ announced that it is expanding its ETF research offerings.

Here are the latest developments of interest to advisors:

1) ProShares Launches New High-Yield Bond ETF

ProShares announced Thursday the launch of ProShares High Yield-Interest Rate Hedged (HYHG), a new high-yield bond ETF that uses Treasury futures to provide a built-in hedge against rising interest rates.

HYHG maintains short positions in 2-, 5- and 10-year U.S. Treasury futures contracts to hedge its portfolio against possible rate increases.

It seeks to track the performance of the Citi High Yield (Treasury Rate-Hedged) Index, which aims to provide diversified exposure to a liquid portfolio of high-yield bonds while seeking to mitigate the impact of interest rate movements.

To be included in the index, bonds must have a minimum issue size of $1 billion, be issued within the past five years and have at least one year remaining until maturity. No more than two issues from one issuer are allowed, and no more than 2% of the index is allocated to a single issuer.

(The index does not attempt to mitigate other factors influencing the price of high-yield bonds, such as credit risk, which may have a greater impact on high-yield bond prices than changes in interest rates.)

By combining the Smarsh archiving and compliance solutions with the SMARTS platform, customers globally will be able to fine-tune compliance and risk-management activities, the company says. The combined solution aims to provide users with the ability to extrapolate additional value through the correlation of trading data with employee and customer communication, such as e-mail, instant messages, mobile messages and social-media posts.

S&P Capital IQ says it’s added research coverage on hundreds of additional ETFs to its MarketScope Advisor platform. Reports and rankings are being made available on approximately 180 fixed-income ETFs, with reports offering asset class analysis also offered on more than 60 ETFs focused on commodities and currencies.

About half of the fixed-income ETF reports being added to S&P Capital IQ's research offering have a live history of less than three years, with roughly 50% of those having more than $100 million in AUM.

S&P Capital IQ will be using a holdings-based approach for the fixed-income ETFs, similar to that created by the company for equity ETFs, which will result in rankings of overweight, marketweight, or underweight. Factors that are considered in this approach include credit quality, interest-rate sensitivity, expense ratio and trading characteristics.

The research reports will also include credit default swap data and commentary and insights from S&P Capital IQ's experienced fixed income and ETF analytical teams.